Legal News
Lilly to Pay Out Millions to Settle Lawsuits Over Zyprexa
Psychiatric News
Volume 42 Number 3 page 1-30

Eli Lilly and Co. announced last month that it has entered into settlement agreements with attorneys representing thousands of patients who claim they were harmed by the company's second-generation antipsychotic medication, Zyprexa (olanzapine). All told, the settlements could amount to payouts equaling $1.2 billion.

The company has been entangled in a legal maelstrom for more than three years, facing numerous product-liability civil lawsuits alleging the company withheld or attempted to cover up data concerning questionable efficacy and a strong association between taking olanzapine and significant weight gain, which could lead to the development of diabetes and/or cardiovascular disease.

Since the drug's approval in 1996, Zyprexa has been prescribed to about 20 million individuals worldwide, according to Lilly. Zyprexa is by far the company's biggest seller, bringing in $4.2 billion in revenues in 2005—30 percent of the company's total revenues for the year.

A higher incidence of diabetes in patients taking olanzapine was apparent to Lilly researchers early in development of the drug and was readily apparent during the phase III clinical trials of the drug in the early to mid-1990s. The first five of what would become thousands of lawsuits against the company claiming that olanzapine caused patients' diabetes were filed in 2003.

The vast majority of the individual civil claims against Lilly were consolidated into a class action by the Federal District Court for the Eastern District of New York. The company is specifically accused of with-holding data questioning Zyprexa's effectiveness compared with other antipsychotic medications and minimizing or covering up data regarding serious side effects associated with the drug.

At press time, Lilly was also facing ongoing criminal investigations in at least five states—New York, Florida, Pennsylvania, Illinois, and Vermont—regarding accusations that the company illegally and aggressively marketed the product for unapproved uses, resulting in hundreds of millions of dollars in extra costs for individuals, insurance companies, and taxpayers who fund the state/federal partnership, Medicaid.

Although Lilly did not respond to requests from Psychiatric News for input on this article, the company denies the allegations in statements on a new Web site. Lilly says it launched the site "to give the public factual information about the legal issues that confront the company's atypical antipsychotic, Zyprexa."


The Web site notes that "[f]rom the day that Zyprexa was first marketed, the labeling provided to physicians identified the potentially clinically significant weight gain that was observed in more than half of all patients treated long term with Zyprexa, as well as the diabetes-related adverse events observed in clinical trials."

The Web site also says, "Lilly's Company policy, which is endorsed by senior management, has always supported full disclosure of adverse-event information on Zyprexa, and all Lilly medicines, to the FDA."

Lilly stated that it entered into settlement agreements "to resolve the vast majority of remaining product-liability claims against Lilly relating to [Zyprexa]." The agreements follow a June 2005 "master settlement agreement" that covered approximately 8,000 individual claims against the company, bringing the total claims subject to out-of-court settlements to more than 18,000.

As a condition of the 2005 settlements, Lilly paid about $700 million to claimants. The latest settlement agreement, according to a company statement, should amount to "substantially less" in payments. While the exact amount is under review, the company said "it is not expected to exceed $500 million."

In a statement announcing the latest round of settlements on January 4, Lilly Chair and Chief Executive Officer Sidney Taurel, noted, "While we remain confident that these claims are without merit, we took this difficult step because we believe it is in the best interest of the company, the patients who depend on this medication, and their physicians."

The decision to resolve the claims, Taurel added, "does not change the fact that Zyprexa has [improved], and will continue to improve, the lives of millions of patients around the world."


Attorneys representing the consolidated claims had been in negotiations with the company since last fall, attempting to reach out-of-court settlements. Those negotiations were significantly influenced when a large number of sensitive internal documents compiled by the company during the discovery phase of the litigation were leaked to New York Times business reporter Alex Berenson and a number of organizations involved in mental health issues.

The documents had been placed under seal by the court but were provided to the Times and the other organizations by an attorney who was not directly involved in the product-liability suits, but who represents mentally ill patients subject to state-mandated treatment with psychiatric medications.

Berenson subsequently wrote a series of articles based on the hundreds of pages of leaked documents, comprised of company letters, e-mails, memos, presentations, and reports.

Shortly after Berenson's New York Times articles appeared, the documents were posted on numerous Web sites, including many outside the United States. A search for "Lilly lawsuit documents" conducted by Psychiatric News the week of January 8 produced multiple links to Web sites where the documents could be downloaded.

The documents provide evidence of a number of actions by Lilly or its employees that are damaging to the defense of its positions in the law suits.

In a prepared statement, Lilly said it "vigorously objects to the characterization of company practices in [the] New York Times article[s] based on selective documents illegally leaked by plaintiffs' lawyers."

Lilly went on to say that the Times articles failed to mention that the leaked documents "are a tiny fraction of the more than 11 million pages of documents provided by Lilly as part of the litigation process. They do not accurately portray Lilly's conduct."

In a letter to the editor submitted to the New York Times, APA President Pedro Ruiz, M.D., acknowledged that the Times articles raise "important and troubling questions." Ruiz wrote," Physicians and patients need as much information as possible about the risks and benefits of medications. America needs an open, mandatory, public database of all clinical trials now."

The New York Times' articles detailing the leaked Lilly documents can be accessed for a fee at<www.nytimes.com>. Lilly's response to the lawsuits and information on Zyprexa are posted at<www.zyprexafacts.com>.

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